It’s been more than a decade since the real estate market hit its low point, and today it is more active than ever, with many people finding real estate investment projects to be the best way to balance out their portfolios. It’s easy to understand how real estate becomes attractive as an investment, and it has been a core part of many portfolios for years. Today, new opportunities for investors have made the market even more attractive, with many investors at every level finding that they can realize a higher rate of return with a lower risk than through many other investment channels. The forces that created these markets are unique, and they might not last forever, which is why any approach to real estate investment needs to take a balanced view, using both traditional strategies and new paths to build an income.
Short-Term Rental Booms
One of the biggest reasons for the sharp uptick in real estate returns is the increase in short-term rental investments. Not only do short-term and seasonal rentals provide a great part-time income opportunity in areas with strong tourist economies, they are proving more and more important in business as travel for work becomes a norm in more careers. Cheap air fare and accessible public transportation have coupled with a global economy to create an entire class of highly mobile individuals who live large parts of their professional lives in transit, so providing corporate suites and lodging to short-term clients has become a great new way to round out a portfolio. There are a few pitfalls to look out for, however.
- Not all short-term rental platforms are created equally, and not all of them are equally conscientious about local real estate ordinances
- Cities have moved to curb the activities of large operators, especially when they act as an alternative to hotels
- Private corporate offerings do not have the same set of regulations as private lodgings like apartment sharing apps
Make sure you fully understand the investment landscape before engaging with today’s booming short-term market, because the potential for high returns is not a guarantee. Knowing the risks is the best way to avert them.
Home Purchases as Investments
Whether you’re looking for a vacation property, a seasonal home for part of the year, or a full-time house for yourself, investing in property and occupying it is a great way to increase your net worth while enjoying your life. Many successful entrepreneurs take this attitude, cultivating a practice of home buying that seeks out unique architecture and vibrant local communities to provide investor-owners with a beautiful home they can upgrade while they occupy that is also likely to increase in value on its own because of its location. One great example of this is the Chris Sacca home in Manhattan Beach, CA. Mr. Sacca is a regular guest on the show Shark Tank and a successful investor with a net worth of $1.2 billion, demonstrating how this investment strategy continues to serve you as your holdings grow.
Commercial Real Estate Investment
Office space has been in high demand around the country for the past few years as more and more companies incubate to the size where their operations scale up to the global marketplace. While the demand for new offices has receded somewhat in many markets, there are also many where it is going strong into 2019 and likely to stay strong. Even in those areas where new office developments are in lower demand, investing in commercial properties like restaurant spaces and retail complexes can provide opportunities as those businesses provide support for the recently built office buildings’ inhabitants. There’s also a lot to be said for competing against existing office space by providing more energy-efficient buildings with better amenities.
Commercial real estate is a great place to put investment money if you research the local market and find your niche, but it is also diverse enough that an operator who doesn’t really understand what is happening locally can make some pretty costly mistakes. Not every location has the same needs, and the shape of the local industrial and commercial economy will dictate the shape of the commercial real estate market. Still, in a portfolio that looks to manage its risks and opportunities within real estate to ensure real estate is a stable cornerstone for other investments, commercial properties play a key role as high-value resale holdings and strong income earners.
Is It Your Time To Invest in Real Estate?
It takes a mixture of working capital and knowledge to make the commercial real estate market work as an investor, but if you are looking to hold properties for the long-term, it can be a great stabilizing influence for your other investments. The key is to approach it like any investment. Be skeptical of boom hype, look for opportunities that aren’t clogged with other investors, and remember that once a trend hits the mainstream news, it’s probably too late to maximize its potential. If you follow those basic rules, you should be able to find your best opportunities locally.